THE BOOK, Fighting For The Future: Nigeria Pension Reform Journey, is a chronicle of efforts by successive governments in Nigeria from pre-independence era to date, to put in place pensions for Nigerian workers in both the public and private sectors. However, the heart of the book is the pension reform carried out in 2004. This theme is of utmost importance to everyone. We are either a pensioner, looking forward to becoming one or have a pensioner in our family or as a neighbour.
The author of the book, Aisha Dahir-Umar, is the current Director General of the National Pension Commission (PenCom). I cannot agree less with M. K. Ahmad the pioneer Director General of PenCom, who wrote the Forward to the book, when he stated that the author of the book, who is the third and current Director General of PenCom, is well placed to tell the story because she was part of the process right from the conception to birth, and has also been part of PenCom from then till date.
The author, in putting forward her credentials towards writing the book under the Author’s Note, wrote: “Looking back, I would say it was part of my destiny to spend the best part of my career at PenCom, where I rose to the top as Director General, having started as a Deputy General Manager in 2005. I was privileged to be part of the pension reform process. I watched history unfold in the Pension Industry. I witnessed a revolution. I have experienced all the developments and challenges as the industry continues to evolve. On the job, I have learnt and unlearnt theories of change management.”
To me, the book is a chronicle of all the fights for the future of Nigerian workers. The fight to help them maintain a standard of living in retirement that is close to what they enjoyed during their working life. A fight aimed at ensuring that workers do not spend their later days in life in poverty and destitution.
As an industry watcher, I am convinced that what the author termed as a few setbacks are actually very serious setbacks that are affecting members of the CPS, which political authorities at both the federal and states government levels have not shown the political will to correct. Some of these setbacks include the posture of majority of the state governments that are yet to enact pension laws for their employees and those that have enacted with the exception of about seven are operating the laws in default.
When a comrade suggested I do a brief review of the book, I didn’t think twice. I was pleased to do so as I felt privileged to be asked to review the book since it has to do with the Contributory Pension Scheme (CPS). I regard myself as one of the faces of the CPS in Nigeria. I was a member of the Fola Adeola Pension Reform Committee whose recommendations led to the enactment into law of the Pension Reform Act 2004, that established the CPS and the National Pension Committee (PenCom). I also had the privilege of being a member of the pioneer Governing Board of PenCom and I retired from the federal public service under the CPS.
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I will depart from the conventional and academic method of reviewing books. What I am going to do is to give a helicopter view of the contents of the book and making comments where necessary.
The book has 10 chapters and provides an excursion into the pension industry, the historic journey to reform and the success brought about by the reform.
The author picked policies of PenCom to explain how the scope of pension has been broadened over the years in Nigeria. Those who still harbour doubts about the viability of the reform will hopefully be persuaded that it is here to stay. It can only get better. The author is confident that a few setbacks the industry had experienced over the years will be corrected by political authorities now or later.
As an industry watcher, I am convinced that what the author termed as a few setbacks are actually very serious setbacks that are affecting members of the CPS, which political authorities at both the federal and states government levels have not shown the political will to correct. Some of these setbacks include the posture of majority of the state governments that are yet to enact pension laws for their employees and those that have enacted with the exception of about seven are operating the laws in default. The other is the funding of accrued pension rights, which is causing delays in payment of pension upon retirement; the non-implementation of the minimum guarantee pension and review of pensions of retirees under the CPS in line with the provisions of the Constitution, among others.
In chapter one, titled; “the Old Order”, the author talked about pension being a short word but with a long history in Nigeria. She traced the history from the Pension Ordinance introduce via circular 19 of 24 March, 1945 with a commencement date of 1946, which was for Native Administrative Servants, as public servants in that era were called.
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The chapter talked about the first two, private sector defined benefits schemes put in place by the Nigerian Brewery and the United African Company (UAC) for their employees in 1957. She wrote about the first attempt at putting in place a government managed pension scheme for employees of the private sector through the enactment of Nigerian Provident Fund (NPF) Act of 1966, which provided a lump sum benefit only. The NPF Act was repealed by the National Social Insurance Trust Fund Decree No. 73 of 1993 with a commencement date of July 1994. For the public service Decrees 102 and 103 were enacted in 1979, implementing Defined Benefits Schemes for public servants and the military respectively.
As a member of the Fola Adeola Committee, it is necessary for me to state that in the recommendations of the committee and the bill sent to the National Assembly, employees of states and local governments were also covered. However, state governors, under the auspices of their union, the Nigeria Governors Forum, mobilised members of the National Assembly from their states to remove employees of states and local governments from the bill before passage on the grounds that pension was not under the exclusive legislative list of the constitution.
She concluded chapter one with the challenges in the management of public pension in the era, which she summed up as funding challenges; weak administration; lack of commitment and compliance; fraudulent practices; and cumbersome processes.
She commenced chapter two by stating that the attempt to find a lasting solution to pension challenges by President Olusegun Obasanjo commenced with the setting up of a seven-member committee headed by Chief Ajibola Ogunshola, former Managing Director of Niger Insurance Ltd, whose recommendations were not implemented by the government.
I had the privilege of being a member of that committee. One of the recommendations, which did not go down well with the government of the day was a recommendation that employers, including states and federal governments, should continue to pay gratuities to employees to help them settle down in the absence of a comprehensive social security in the country and the funds that will be generated through contributions by both the employer and employee should be used to pay pension.
I recall that on the day our committee submitted its report, President Obasanjo said: “I am surprised that when government wants to hands of sole responsibility of paying pension, you still recommended that government should solely be paying gratuity”.
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The author, in writing about the journey into the reform, stated that in full determination to address the endemic pension crisis in the country, President Obasanjo set up the Pension Reform Committee which was chaired by Mr Fola Adeola, co-founder of Guarantee Trust Bank (GTB), with the author as secretary. The Bureau of Public Enterprises, which had Nasir el-Rufai as the Managing Director, drove and funded the work of the committee with the full support of President Obasanjo.
The Fola Adeola Committee completed its work and on the basis of its recommendations, the federal government prepared the Pension Reform Bill and submitted it to the National Assembly in 2003. After passing through legislative processes, the bill was passed on 23rd June, 2004 and the Pension Reform Act 2004 was signed into law by President Obasanjo on 25th June, 2004.
She wrote that the Act established the CPS) and PenCom giving coverage to employees of the Public Service of the Federation, Federal Capital Territory and the private sector.
The financial sector is a principal beneficiary of the reform. Most Pension Fund Administrators and all Pension Fund Custodians are subsidiaries of banks. The life insurance and annuity branches of insurance sub-sector, which were relatively unknown by most Nigerians, are now thriving businesses. The nation’s economy has been busted with pension funds as long-term investable funds.
As a member of the Fola Adeola Committee, it is necessary for me to state that in the recommendations of the committee and the bill sent to the National Assembly, employees of states and local governments were also covered. However, state governors, under the auspices of their union, the Nigeria Governors Forum, mobilised members of the National Assembly from their states to remove employees of states and local governments from the bill before passage on the grounds that pension was not under the exclusive legislative list of the constitution.
Writing on the enactment of the Pension Reform Act 2014, she stated that ten years later, the Pension Reform Act 2004 was repealed and re-enacted with new provisions and modifications. The new bill, she wrote, was signed into law on 1st July, 2014 by President Goodluck Jonathan.
She said the truth when she wrote that pension reform marked the beginning of a new pension system for the financial sector, employees, employers and Nigeria as a whole. The fact is that it is difficult to erase from the minds of Abuja residence the memory of military pensioners, who came from all over the country for the payment of their pensions, sleeping on street pavements around Agura Hotel. The case of civilian pensioners was not different.
The financial sector is a principal beneficiary of the reform. Most Pension Fund Administrators and all Pension Fund Custodians are subsidiaries of banks. The life insurance and annuity branches of insurance sub-sector, which were relatively unknown by most Nigerians, are now thriving businesses. The nation’s economy has been busted with pension funds as long-term investable funds.
She presented transitional provisions in chapter three, where she discussed transition from the old Defined Benefits Scheme (DBS) as it affected the public and private sectors as well as transition from the Nigerian Social Trust Fund (NSITF) to the CPS. The establishment and duties of the Pension Transitional Arrangement Directorate (PTAD) established by the Act was mentioned here. PTAD has responsibilities of budgeting and payment of pension to all retired federal public servants, who were on pension pay roll before the coming into effect of the Pension Reform Act 2004 and all those exempted from the CPS.
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A Nigeria folklore says that when a lizard falls to the ground from a high distance, it begins to bob its head as a sign of congratulating itself that it is still alive, if no one does so. The author used chapter four of the book to put forward the achievements of PenCom, that she called policy pillars, which according to her have contributed to the exponential growth of the pension industry. They include but not limited to digital transformation; Retirement Savings Accounts (RSA) transfer window; capital review; the micro pension plan; residential mortgage; RSA Multi-Fund Structure; and voluntary contributions.
Every other stakeholder exists because of the pensioner. Take away the pensioner and there is no pension industry. She stated that without the management of other stakeholders including government, that is responsible for policies and regulations; employers of labour, who also contribute and must remit contributions; operators who are fund administrators and custodian; and PenCom staff, who supervise the industry through regulations, effective services will not be rendered to the pensioner.
Mrs Dahir-Umar stated the obvious in chapter five where she penned down that despite glaring successes of the pension reform, there has been one push back or the other by those who think they are better served by the DBS that the public sector used to operate before the reform. According to her, these individuals believe the CPS reduces their take home pay.
Speaking from the standpoint of a pensioner under the CPS, who has colleagues who retired years before me under DBS on the same salary grade level and number of years of service, I state here emphatically without fear or favour that it is not a matter of believe, but a fact and stack reality.
She said the truth, when she wrote about attempts by some governmental bodies and senior officials to exit the CPS, which is unhelpful to the system. She gave examples of Head of Civil Service of the Federation (HCSF) and Permanent Secretaries who have exited the scheme via presidential fiat while the National Assembly Service has been exempted by a law. In May, 2023 a bill was also passed by the National Assembly for the exemption of the Nigeria Police.
The so-called government bodies were made faceless in the book. However, the blame for these exemptions should be put squarely at the door steps of President Buhari who exited the HCSF and Permanent Secretaries through a presidential (administrative) fiat without a law and assented to the bill exiting National Assembly Services contrary to the earlier position of his government that no other federal government agency will be allowed to exit the scheme.
In chapter six, Mrs Dahir-Umar told the story of how she had to fight for her career and integrity along with fighting for the future of pensioners because she is not immune to the “pull him/her down” syndrome experiences of most public officers. She called it the media wars.
She was just stating the obvious in chapter seven when she wrote that everything PenCom does is ultimately targeted at delivering excellent service to one person, the pensioner, who is the most critical stakeholder in the pension industry.
Every other stakeholder exists because of the pensioner. Take away the pensioner and there is no pension industry. She stated that without the management of other stakeholders including government, that is responsible for policies and regulations; employers of labour, who also contribute and must remit contributions; operators who are fund administrators and custodian; and PenCom staff, who supervise the industry through regulations, effective services will not be rendered to the pensioner.
In chapter eight, she again said the truth by stating that the success story of the pension reform started from a non-existing industry and moving in July, 2004 from a national public sector deficit of N2.4 trillion to February 2023 with accumulated pension assets of N15.45 trillion. That can be termed the pension revolution.
The philosophy of social security in Nigeria can be found in the extended family and kinship system. In this system, members of each family and group take care of one another. They come together in times of celebration, calamity and emergency to collectively celebrate or alleviate the losses and sufferings of members of the family or group.
The success story touched benefits paid as lump sum, programmed withdrawal and annuity; remittance by employers; transparency and accountability in pension administration; investment of pension funds in bonds and securities; mortgage access by members of the Scheme; pension for everyone through the Micro Pension Plan; online enrolment; transfer system from one PFA to another; pension enhancement; participation by states; simplified documentation ; additional lump sum for some of those who have already received lump sum; job loss benefits; mobility of labour; Non-interest Fund (NIF); missing persons; and NSITF contributions.
She used chapter nine to chronicle the challenges of the reform, stating the obvious that implementation of the CPS across public and private sectors in Nigeria has been challenging. The challenges she stated include, poor practices. She stated that although the pension industry is one of the most tightly regulated in Nigeria, PenCom still discovers and deals with sharp practices; slow adoption of the CPS in states and private sector; partial compliance by employers; low accumulation of funds; funding shortfalls; NSITF switch; and cultural and extraneous issues.
She again spoke the truth when she wrote about low accumulation of funds because employers, especially in the public sector comply only with the minimum rates of contributions stated in laws. In some states, state governments are only remitting employees contributions without making employers contributions as provided for in their own laws.
In the last chapter of the book, she stated that Nigeria’s pension reform may still be facing some challenges but expressed confidence that the progress so far made has reached an irreversible stage. She further stated that the pushbacks and oppositions she stated are not unexpected when people are convinced that they stand to benefit more from different system.
She concluded the chapter with a fundamental advocacy for multiple social security benefits including free medical care for pensioners and proposed amendments to the Pension Reform Act 2014.
Drawing from her conclusion, I will also conclude this review with the concept of social security.
The philosophy of social security in Nigeria can be found in the extended family and kinship system. In this system, members of each family and group take care of one another. They come together in times of celebration, calamity and emergency to collectively celebrate or alleviate the losses and sufferings of members of the family or group.
Different parts of the country have their own ways of achieving the same goal. The age grade system and town unions in the south eastern part of the country, for example, exist for mutual benefits of their members in accordance with the constitution of each group or association. Social clubs, which exist in every nook and cranny of the country, perform similar functions. Churches, mosques and several other organisations are involved in the provision of similar assistance to their members.
There have been several articles in journals, newspapers and online on pension with majority being lamentations on the plight of pensioners. This book is the first comprehensive book on current Nigeria pension law, administration, supervision and regulation. The book should be of interest to trade unionist, their leaders, workers and academicians.
The modern-day concept of social security evolved out of mankind’s quest for protection from the hazards arising out of vagaries of nature, life and work in modern societies. The origin of the modern-day concept of social security dates back to late 19th century in Europe but it was only in the three decades following the Second World War that it developed its characteristic features. As the International Labour Organisation (ILO) noted, as the pace for industrialisation quickened, a large new class of factory workers emerged, completely dependent for their livelihood on the regular payment of wages. They could well be reduced to deprivation if and when their wages stopped during sickness and unemployment, following work injury or in old age.
In the attempt to protect the urban labouring classes from destitution, several other systems evolved. There were for instance, savings bank facilities sponsored by governments; there were measures laying upon employers some obligation to maintain the ill or injured workman; there was the growth of mutual aid societies organised to provide modest cash aid in sickness and old age; and private insurance development simple life policies and funeral benefits.
The above brief summary traces the development of the concept, which has come to be known as social security. ILO further states that the expression acquired a wider interpretation in some countries than others. It defined social security as the protection which society provides for its members, through a series of public measures, against economic and social distress that otherwise would be caused by stoppage or substantial reduction of earnings, resulting from sickness, maternity, employment injury, unemployment, invalidity, old age and death.
The purpose of this review is to give a helicopter view of the book to all those who ought to read it, especially Nigerian workers, trade unionist and those advocating for the welfare of workers in the believe that it will provoke them to read it. There have been several articles in journals, newspapers and online on pension with majority being lamentations on the plight of pensioners. This book is the first comprehensive book on current Nigeria pension law, administration, supervision and regulation. The book should be of interest to trade unionist, their leaders, workers and academicians.
Comrade Takor was a two-term President of NASU, a two-term National Treasurer of NLC and an inaugural member of the Board of PenCom. Comrade Takor retired as a Director in federal service and is now a Lagos-based legal practitioner. He is an alumnus of the National Institute of Policy and Strategic Studies (NIPSS), Kuru-Jos, Plateau State.
